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Resea ch A icle
An In es iga ion o Fac o s Con ibu ing o Tax A oidance and
E asion Among C oss-Bo de T ade s in Lilongwe Ci y, Malawi
Limbani Lungu *1, D . M. Maheswa an 2
1 Mas e o Comme ce in Accoun s and Finance, DMI S Eugen, Zambia
2 Dean, DMI S Eugen, Zambia
Co esponding Au ho : *Limbani Lungu DOI: h ps://doi.o g/10.5281/zenodo.17328679
Abs ac
Manusc ip In o ma ion
This esea ch in es iga es ax e asion and a oidance among c oss-bo de in o mal ade s in
Lilongwe Ci y, Malawi, in o de o examine ac o s a ec ing compliance beha iou and
in es iga e mechanisms o imp o ing ax collec ion. A mixed-me hods design was employed,
combining su ey da a om 62 s uc u ed ques ionnai es and quali a i e da a om in e iews
and ocus g oup discussions conduc ed wi h he ade s and s akeholde s. The su ey assessed
demog aphic and socio-economic p o iles o ade s, awa eness and knowledge o ax
demands, he impac o ins i u ional and egula o y amewo ks, pe cep ions o he axa ion
egime, and he con ibu ion o go e nmen policies owa d en o cing compliance. The esul s
indica e ha al hough mos ade s a e cognizan o hei ax bu den, ax compliance is
us a ed by excessi e axa ion a es, bu densome p ocesses, co up ion, and he absence o
e ec i e en o cemen . The majo i y o ade s a e young, ela i ely educa ed, and a e ading
on a small scale, and expe ience di icul ies wi h insu icien aining and capaci y o deal
e ec i ely wi h ax sys ems, leading o bo h delibe a e and inad e en non-compliance. The
epo highligh s he need o anspa ency, ai ness, axpaye educa ion, and selec i e
incen i es in o de o enhance olun a y compliance. The s udy ecommends ax policy
e o m, simpli ied p ocedu es, enhanced capaci y-building p og ams, s onge an i-co up ion
e o s, and enabling incen i es o small ade s. Mo e b oadly, he esea ch adds o knowledge
o in o mal axa ion o ade in Malawi and p o ides policy- ele an ecommenda ions o
enhance he ax base and encou age compliance.
▪ ISSN No: 2583-7397
▪ Recei ed: 03-08-2025
▪ Accep ed: 27-09-2025
▪ Published: 11-10-2025
▪ IJCRM:4(5); 2025: 312-319
▪ ©2025, All Righ s Rese ed
▪ Plagia ism Checked: Yes
▪ Pee Re iew P ocess: Yes
How o Ci e his A icle
Lungu L, Maheswa an M. An
in es iga ion o ac o s con ibu ing
o ax a oidance and e asion among
c oss-bo de ade s in Lilongwe
Ci y, Malawi. In J Con emp Res
Mul idiscip. 2025;4(5):312-319
Access his A icle Online
www.mul ia iclesjou nal.com
KEYWORDS: Tax compliance, ax a oidance, ax e asion, c oss-bo de ade, in o mal ade s, Malawi, ax policy, en o cemen ,
capaci y building.
1. INTRODUCTION
Backg ound o he Topic
Tax a oidance and e asion a e ongoing global issues ha e ode
he capaci y o go e nmen s o mobilize su icien domes ic
esou ces o sus ainable de elopmen (OECD, 2021). The Sub-
Saha an egion is losing billions o dolla s annually due o hese
ac i i ies, which enhance iscal ulne abili y and cons ain he
inancing o i al se ices such as heal hca e, educa ion, and
in as uc u e (UNCTAD, 2020). In de eloping na ions like
Malawi, e enue om axa ion is he backbone o he na ional
budge , being he main sou ce o inancing o he go e nmen
(IMF, 2022). Compliance is hampe ed by he pe asi e
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in o mali y o economic ac i i y, especially in he c oss-bo de
ade economy.
C oss-bo de ade in Malawi en ails he expo a ion and
impo a ion o goods and se ices o and om he neighbo ing
coun ies, namely Zambia, Mozambique, and Tanzania.
Al hough his sec o has bo h egis e ed businesses and
un egis e ed ade s, he la e a e nume ous in numbe bu a e
mos ly ou side he ax ne . The majo i y o in o mal ade s
ope a e wi hou business licenses, ha e weak eco d-keeping
sys ems, and consis en ly ail o pay axes (Chiumia, 2022).
Malangalanga, Bwaila S ee , A ea 2 Bwalo la Njo u, and A ea
3 Old Town a e some o he ma ke s in Lilongwe Ci y ha
se e as ocal poin s o such ac i i y. Fo mos households,
pa icipa ion in hese ma ke s is no only a business ac i i y bu
also a su i al mechanism in he ace o sca ce o mal
employmen oppo uni ies.
Tax a oidance by in o mal c oss-bo de ade s is a esul o
in e ela ed p oblems. Disincen i e is c ea ed due o high ax
a es, pa icula ly among hose wi h low p o i ma gins. Lack o
ax ac awa eness and inadequa e axpaye educa ion c ea e
misunde s andings. Ine iciencies and bu eauc a ic delays a e
also men ioned by ade s as u he disincen i es. Weak
en o cemen and en enched co up ion c ea e loopholes o
a oidance, and p e alen po e y compels mos ade s o ocus
on su i al om day o day a he cos o legal compliance
(Fjelds ad, 2023).
Despi e he sec o ’s signi icance, limi ed empi ical esea ch
exis s on he speci ic d i e s o ax a oidance and e asion
among Malawi’s c oss-bo de ade s. Cu en es ima es by he
Malawi Re enue Au ho i y (MRA) sugges ha less han 60%
o he coun y’s po en ial ax e enue is collec ed, wi h in o mal
ma ke s accoun ing o much o he sho all. This means ha
o e a hi d o axable income is uncollec ed, unde sco ing he
se iousness o he issue. B idging his gap equi es a numbe o
in e en ions: imp o ing he educa ion o axpaye s,
simpli ica ion o p ocedu es, le e aging he applica ion o
online pla o ms such as Msonkho Online, inc easing
en o cemen , and igh ing co up ion in ax adminis a ion. In
addi ion, he design o low-cos and ai ax sys ems ailo ed o
small-scale business people, as well as incen i es o o malize,
may acili a e olun a y compliance.
This s udy seeks o ad ance he policy deba e by analyzing he
oo causes o ax a oidance and e asion among in o mal c oss-
bo de ade s in Lilongwe Ci y. By examining he s uc u al,
ins i u ional, and beha io al dimensions o non-compliance, he
esea ch aims o gene a e e idence-based ecommenda ions ha
can suppo ax e o ms. Ul ima ely, he s udy in ends o
con ibu e o domes ic e enue mobiliza ion while p omo ing
inclusi e g ow h and encou aging he g adual o maliza ion o
Malawi’s c oss-bo de ade sec o .
2. OBJECTIVES OF RESEARCH
Main Objec i e
The main objec i e o his esea ch s udy is o in es iga e he
ac o s con ibu ing o ax a oidance and e asion among c oss-
bo de ade s in Lilongwe Ci y, Malawi.
Speci ic Objec i es
1. To iden i y he socio-economic cha ac e is ics o c oss-
bo de ade s who a ec ax compliance in he ci y o
Lilongwe.
2. To assess he le el o awa eness and unde s anding abou
ax obliga ions be ween ade s ac oss he bo de .
3. To in es iga e he impac o ins i u ional and egula o y
ac o s, including en o cemen and alleged co up ion, on
ax compliance.
4. To analyze how he cha ac e is ics o he ax sys em, such
as ax a es and p ocesses, a ec compliance beha iou .
5. P oposing policy measu es aimed a imp o ing ax
compliance be ween c oss ade s in Lilongwe ci y.
Scope o he Discussion
This s udy is geog aphically loca ed in he majo business zones
o Lilongwe Ci y, Malawi, speci ically Malangalanga Ma ke ,
Region 2 Bwalo la Njo u, Bwaila S ee , and Region 3 Old
Town, which a e iden i ied as cen al poin s o c oss-bo de
ading ha is p ima ily conduc ed wi h bo de coun ies,
including Zambia, Mozambique, and Tanzania (Malunga,
2021). The s udy in es iga es he no ion o ax compliance, and
ocuses on he socio-economic cha ac e is ics o ade s, hei
iews and comp ehension o axa ion obliga ions, he
condi ional ac o s o ins i u ions o egula o y, and s uc u al
cha ac e is ics o he ax sys em ha enable non-compliance.
The s udy does no include o mal la ge impo e s and expo e s
who ha e engaged in he s uc u ed, o mal economy.
Tempo ally, he s udy is limi ed o he pe iod 2015–2025 in an
e o o eco d ecen da a, policies, and ends ha e lec he
cu en eali y (Wo ld Bank, 2020). Da a collec ion o bo h
quali a i e and quan i a i e me hods will be owa ds ade s
engaging in c oss-bo de ade. Al hough he indings e lec a
Lilongwe Ci y se ing, hey a e expec ed o be gene ally
ele an o ax e o m and egula ing he in o mal ade sec o
in o he ci ies in Malawi and Sub-Saha an A ica (Kedi , 2021).
The quan i a i e pa o he s udy will include ques ionnai es
de ised in a s uc u ed me hod.
3. LITERATURE REVIEW
O e iew o P e ious S udies o Rele an Resea ch
Empi ical Li e a u e Re iew
Ex ensi e empi ical esea ch a bo h an in e na ional and
na ional le el has s udied pa e ns o ax compliance and he
ac o s ha d i e axpaye beha io . Findings ha e consis en ly
e ealed ha socio-economic a ibu es, including income,
le els o educa ion, and you own p o ession, ma e and
demons a e ele ance o compliance. Impo an ins i u ional
ac o s such as he capabili ies o he ax au ho i y, he
e ec i eness o en o cemen , and public iews on go e nance
also eme ge as essen ial. Alongside hese, also seen in he
li e a u e is he impo ance o ax li e acy and awa eness.
Resea ch indica es he in luence o knowledge o axa ion on
compliance o a deg ee (Kassie & Teklewold, 2020).
In Malawi, esea ch in o in o mal c oss-bo de ade again
d aws pa allels and simila i ies o sub-Saha an A ican pa e ns
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whils ecognising impo an na ional eali ies. Resea ch
sugges s ha in o mal ade s o en ope a e in a cons ained
socio-economic en i onmen , inding hemsel es mo e likely o
engage wi h bu ha ing limi ed access o many o he o mal
inancial se ices and, meanwhile, egula ions ha can bo h
hinde compliance and discou age compliance and he
egula ion o ax (Chipe a, 2021). The empi ical esea ch he e
has explo ed he in e play be ween indi idual, ins i u ional, and
s uc u al ac o s ela ing o ax e asion and a oidance.
This e iew o ganizes he li e a u e hema ically, summa izing
esea ch indings, me hodology, and limi a ions. This is
designed o cu a e he esea ch a a global, egional, and local
le el o in o m he socio-economic, ins i u ional, and egula o y
d i e s o ax beha io and o iden i y de ici s in he esea ch o
be illed in his s udy.
Social Economic De e minan s
Se e al s udies ha e shown how economic di icul y and
dependence on in o mal li elihoods shape beha io . In his
s udy by SME in (Thomas & Mun hali 2020), in hei s udies in
Mchinji and Ka onga, hey ound ha many ade s ailed o
pay axes no ou o esis ance, bu because he ax sys ems
we e unsui able o hei small-scale ope a ions. The ade s
h ea ened hei exis ence, complian abou bo h expense and
bu eauc acy, and hus called o simpli ied ules o sui mic o-
businessmen. Howe e , he na ow geog aphical scope and lack
o longi udinal analysis o he s udy limi ed wide insigh .
Simila ly, Mzuma a (2020) ound ha u ban endo s in
Blan y e and Lilongwe aced complex egis a ion p ocedu es,
weak incen i es o compliance, and disabled go e nmen
se ice dis ibu ion, all o which ein o ced comp ehensi e
he . While he s udy o e ed aluable insigh , i s dependence
on sel - epo ed da a and he absence o iangula sou ces
dis up ed i s eliabili y.
On a la ge scale, E ans (2022), d awing om Sou heas Asia
and Sub-Saha an A ica, concluded ha compliance cos
p esen s a signi ican obs acle o o mali ies o small i ms.
Al hough he s udy emphasized he impo ance o simpli ying
he sys em, i p o ided limi ed p ac ical guidance o he
adminis a ion by esou ces, making Malawi less di ec ly
di ec ly o Malawi.
Ano he majo opic in li e a u e is he impo ance o us in
he go e nmen and he pe cep ion o ai ness in shaping ax
beha io . Using c oss- ansi da a om (Ma inez,2023), in
A ica and La in Ame ica, i has been shown ha olun a y
compliance inc eases whe e ci izens belie e ha ax sys ems
a e jus i ied and go e nmen s a e eliable. Howe e ,
dependence on pe cep ion da a inc eases conce ns abou sho -
e m bias and con en .
In Malawi, Cha les (2021) ound ha he pe cep ions o
co up ion, disc imina o y audi , and he go e nmen 's ailu e o
o ganize ax e enue in public goods e adica ed compliance.
Use ul in iden i ying go e nance - anspo a ion links, he s udy
o e ed limi ed ac ionable s a egies o he econs uc ion o
us .
(Felds ad, 2023) emphasized ha he alidi y o he s a e is
cen al o compliance in sub-ci y A ica, gi en ha axpaye s
a e less likely o comply wi h axpaye s when looking a ax
en o cemen as co up o un ai . While he conclusions a e
ele an , Malawi was no included di ec ly in he p ima y
da ase . Simila ly, (ATAF,2019) epo ed ha abou hal o sub-
Saha an A ica is in o mal, which connec s widesp ead
anspa ency, low li e acy, and widesp ead he wi h poo
bo de managemen . Howe e , egional gene aliza ion has
limi ed he u ili y o he epo o coun y-speci ic
imp o emen s a egies.
Socio-Economic De e minan s o Tax Compliance
Va ious s udies ha e examined how economic ha dships and
o - he-books li elihoods shape ax compliance decisions.
(Thomas and Mun hali 2020), A s udy o small and medium-
sized en e p ises (SMEs) in bo de dis ic s o Mchinji and
Ka onga ound ha mos ade s con ibu e li le o no ax, no
ou o ill will, bu because he exis ing ax sys ems a e
incompa ible wi h hei scale o business. Many in o mal
ade s pe cei ed o maliza ion as cos ly and bu eauc a ic, wi h
compliance seen as a h ea o hei su i al. They
ecommended in oducing a ax egime ailo ed o mic o-
ade s. Howe e , he s udy’s geog aphic scope was limi ed o
wo dis ic s and lacked longi udinal analysis, es ic ing
insigh s in o long- e m beha io al changes.
(Mzuma a 2020), In hei s udy o u ban in o mal ma ke
endo s in Blan y e and Lilongwe, hey iden i ied complex
egis a ion p ocedu es, limi ed incen i es o coope a ion, and
ine icien go e nmen se ice deli e y as key con ibu o s o
widesp ead e asion. While hei quan i a i e ques ionnai es and
in e iews p o ided a snapsho o axpaye a i udes, he s udy
was limi ed by sel - epo ing biases and he lack o iangula ed
da a sou ces.
A a b oade le el, E ans 2022) conduc ed ield esea ch in
Sou heas Asia and sub-Saha an A ica and concluded ha ax
compliance cos s o small businesses a e signi ican ba ie s o
o maliza ion. While ad oca ing o sys em simpli ica ion, he
s udy did no p o ide ac ionable insigh s o esou ce-
cons ained ax adminis a ions, limi ing i s ele ance o he
Malawian con ex .
Ins i u ional T us and Go e nance
Ano he key heme in he li e a u e is he in luence o us in
ins i u ions, go e nance, and pe cei ed ai ness on ax beha io .
Ma inez-Vazquez (2023), using c oss-coun y da a om A ica
and La in Ame ica, ound ha olun a y ax compliance ises in
socie ies whe e axpaye s pe cei e he go e nmen as hones
and ax sys ems as equi able. Howe e , he s udy elied hea ily
on pe cep ion da a, which may e lec sho - e m poli ical
moods a he han long- e m ins i u ional a angemen s.
In Malawi, Cha les (2021) su eyed u ban and pe i-u ban
ci izens and ound ha co up ion pe cep ions, disc imina o y
audi s, and ailu e o ein es ax e enues in public goods
educed compliance likelihood. While aluable in linking
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go e nance and compliance, he s udy lacked p ac ical policy
ecommenda ions o es o e ins i u ional us .
(Fjelds ad,2023) Ex ended his idea in a Sub-Saha an A ican
con ex , highligh ing ha s a e legi imacy is cen al o ax
mo ale, axpaye s conceal income when o icials a e pe cei ed
as co up o en o cemen is un ai . Al hough he sample was
la ge, Malawi was no included, limi ing di ec applicabili y.
The A ican Tax Adminis a ion Fo um (ATAF, 2019) simila ly
highligh ed ha nea ly 50% o Sub-Saha an A ica’s ade is
in o mal, a ibu ing his o un anspa en sys ems, low axa ion
li e acy, and poo bo de managemen . While egionally
in o ma i e, he epo gene alized ends ac oss coun ies wi h
di e se ins i u ional capaci ies and did no p o ide localized
e o m s a egies.
Tax Mo ale, Li e acy, and Public Pe cep ions
Tax compliance is also in luenced by in e nalized ci ic du y,
ax knowledge, and mo al obliga ion, collec i ely e e ed o as
ax mo ale. Benno (2019) a gued using c oss-sec ional global
da a ha in e nal mo i a ion is a key compliance d i e ,
especially whe e o mal en o cemen is weak. C i ics, howe e ,
sugges ha mo al appeals alone a e insu icien in con ex s o
weak go e nance and mismanaged public unds.
Kasamabala (2018) ocused on u ban in o mal ma ke s in
Malawi and ound ha low ax li e acy is a p ima y d i e o
a oidance. The s udy emphasized communi y-le el educa ion
bu did no examine whe he such in e en ions led o
sus ainable beha io al change. Simila ly, he Malawi Re enue
Au ho i y (MRA, Annual Compliance Repo , 2021) epo ed
ha o e 60% o in o mal c oss-bo de ade s we e unlicensed
o un egis e ed, ci ing inadequa e knowledge o ax p ocesses
and weak en o cemen as key ac o s. Howe e , he epo was
la gely adminis a i e and lacked deep engagemen wi h
ade s’ expe iences and mo i a ions.
Me hodological Re lec ions Ac oss he Li e a u e
Empi ical ax compliance esea ch employs di e se
ins umen s, om la ge c oss-coun y su eys (To gle , Alm, &
Ma inez-Vazquez, 2020) o coun y-speci ic case s udies and
na ional su eys (Chipe a, 2021; Banda & Mzuma a, 2020;
MRA, 2021). While hese s udies o e insigh s in o
de e minan s o compliance, ins i u ional limi a ions, and
axpaye a i udes, a common me hodological weakness is a
misma ch be ween quali a i e and quan i a i e dep h.
Fo example, adminis a i e epo s like (MRA,2021) and
(ATAF, 2019) cap u e gene al ends bu p o ide limi ed
insigh in o beha io al d i e s, whe eas s udies elying on sel -
epo ed ques ionnai es (Banda & Mzuma a, 2020; Chipe a,
2021) a e suscep ible o social desi abili y bias and in en ional
mis epo ing. Mo eo e , ew s udies apply mixed-me hods o
longi udinal designs, limi ing unde s anding o how compliance
changes o e ime in esponse o policy, en o cemen , o socio-
economic shi s, especially in in o mal ade con ex s.
Theo e ical amewo k
Many p inciples wan o explain why people ollow o su i e
axes. In Malawi, i is impo an o unde s and hese app oaches
o check he beha io o in o mal bo de ade s, which is
complian by bo h s uc u al and beha iou a ec ed by ac o s.
The p inciples below in o m his s udy.
Economic De e ence Theo y
De e ence's Economic P inciple (Oingam and Sandmo, 1972)
belie es ha axpaye s ake a ional decisions, leading o he
bene i o he agains isk and punishmen de ec ion. In
Malawi, he Malawi Re enue Au ho i y (MRA) has a sho -
e m compliance bene i (ATAF, 2021) as a esul o p e en i e
measu es such as bounda y pa ol, seizu es, and p osecu ion.
Howe e , he en o cemen o esou ce bounda ies, co up ion
pe cep ions, and limi ed axpaye awa eness ha e been educed
(Mwaungulu, 2020). This means ha p e en ion alone is no
enough; I should be complemen ed by axpaye educa ion,
us , and ins i u ional imp o emen .
Fiscal Exchange Theo y
Fiscal Exchange Theo y (Sebas ian, 2007) emphasizes a social
con ac . Taxpaye s ollow whe he hey expe ience angible
bene i s om axa ion, namely, in as uc u e, hassle- ee
cus oms se ices, and secu i y. The Malawian da a shows high
compliance in he bo de pos whe e he e a e be e se ices
(Wo ld Bank, 2020; Mzuma a, 2020). Low li e acy, absence o
anspa ency, and weak communica ion o go e nmen
in e en ion weaken his exchange ela ionship. The e o e,
good policy mus be accompanied by se ice dis ibu ion wi h
clea communica ion s a egies o es o e us .
Theo y o Planned Beha iou
Ajzen (1991). The p inciple o planned beha iou ocuses on
app oach, social no ms, and pe cei ed beha io con ols as
mo i a o s o compliance. In o mal ade s mimic non-
compliance o pee s, especially whe e he is no app o ed, and
bu eauc acy and expensi e p ocesses disin eg a e. Empi ical
obse a ion sugges s ha simpli ica ion o egis a ion
p ocesses has imp o ed compliance in Lilongwe ma ke s
(MRA, 2022). This heo y educes s uc u al obs acles such as
co up ion and po e y, which can o e ide indi idual
in en ions.
Ins i u ional Theo y
Ins i u ional heo y (Sco , 2014) emphasizes ha compliance is
based on he alleged alidi y, capaci y, and ai ness o he
ins i u ions. In Malawi, he pe cep ions and mis us o
co up ion in MRA p ocesses decompose olun a y compliance
(Chipped, 2021). In con as , imp o emen can enable
anspa ency and alidi y, such as digi al pla o ms (eg,
msonkho online). Howe e , ins i u ional e o ms a e g adual o
gain belie and should be complemen ed wi h sho - e m
incen i es o o malize in o mal ade s.
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The Resea ch Gap
Despi e g owing li e a u e, impo an gaps emain in Malawi’s
con ex . Much o he esea ch ocuses on Blan y e, Mchinji, o
na ional-le el ends, lea ing Lilongwe’s in o mal c oss-bo de
ading hubs unde explo ed. Fu he mo e, s udies a ely
combine quan i a i e and quali a i e me hods, esul ing in
limi ed iangula ion o indings. Tempo al co e age is also
weak, wi h ew s udies examining he 2015–2025 pe iod, a
decade ma ked by majo policy e o ms, he in oduc ion o
elec onic pla o ms such as Msonkho Online and Elec onic
Fiscal De ices (EFDs), and ex e nal shocks such as COVID-19.
Ano he gap lies in he lack o e idence-based
ecommenda ions ailo ed o he eali ies o small-scale c oss-
bo de ade s. While many s udies iden i y compliance
challenges, ew examine in e en ions such as simpli ied
egis a ion, a ge ed axpaye educa ion, o communi y
engagemen s a egies. This s udy, he e o e, aims o ill hese
gaps by applying a mixed-me hods app oach o examine he
socio-economic, ins i u ional, and beha io al de e minan s o
ax compliance among in o mal c oss-bo de ade s in
Lilongwe Ci y. The ul ima e goal is o gene a e con ex -
sensi i e ecommenda ions ha balance e enue mobiliza ion
wi h he li elihoods o ade s.
4. DISCUSSION
Explana ion o Key Concep s
Tax Compliance: The s udy e e s o axpaye s which, in his
s udy, ul ills he bo de me chan s' legal ax obliga ions,
including egis a ion, accu a e income decla a ion, and imely
paymen o a ea s. This is a cen al concep in ax esea ch,
because an unde s anding o d i e s o compliance is impo an
o imp o e e enue aising, especially wi hin he in o mal ade
sec o .
Tax A oidance: A legal p ac ice whe eby axpaye s minimize
hei liabili ies by exploi ing loopholes, ambigui ies, o
weaknesses wi hin he ax sys em. Al hough no unlaw ul, ax
a oidance unde mines he in en o ax legisla ion and
con ibu es o e enue loss o go e nmen s (Slem od &
Yi zhaki, 2017; James & Nobes, 2019).
Tax E asion: An illegal p ac ice in which indi iduals o i ms
delibe a ely mis ep esen in o ma ion, hide, o p o ide he
in o ma ion o educe hei ax liabili y. Gene al me hods
include low- epo ing income, smuggling goods, and inancial
eco ds manipula ion (Chipe a, 2021). Wi hin in o mal bo de
ading, ax e asion is he mos widesp ead o m o non-
anspo a ion.
In o mal C oss-Bo de T ade (ICBT) e e s o small-scale
ade ac oss na ional bo de s, o en conduc ed by un egis e ed
indi iduals o mic o-en e p ises. While ICBT signi ican ly
con ibu es o li elihoods and local economies in Malawi, i
equen ly escapes axa ion due o i s in o mal na u e
(Mzuma a, 2020).
Socio-Economic Cha ac e is ics: T ade -speci ic
cha ac e is ics such as educa ion, gende , income, and business
ha shape bo h he desi e and abili y o ollow axa ion. S udies
show ha limi ed income and educa ion o en educe
compliance be ween in o mal ade s (Thomas and Mun hali,
2020).
Ins i u ional and Regula o y Fac o s: These include he
en o cemen capaci y o ax au ho i ies, he e iciency o
p ocedu es, and pe cep ions o co up ion wi hin he sys em.
Such ac o s de e mine whe he compliance is pe cei ed as ai ,
easible, and bene icial (Ma inez-Vazquez, 2023; Cha les,
2021).
Tax Sys em Fea u es: S uc u al componen s o a ax egime,
including a es, iling equi emen s, penal ies, and incen i es.
Resea ch highligh s ha high a es and complex p ocesses
discou age compliance, whe eas simpli ied egimes and
incen i es encou age i (Fjelds ad, 2023; E ans, 2022).
Tax Mo ale: The in insic mo i a ion o pay axes, shaped by
ai ness pe cep ions, us in go e nance, and social no ms.
Highe ax mo ale inc eases olun a y compliance, while weak
ins i u ional us unde mines i (Benno, 2019; Kasamabala,
2018).
Awa eness and Unde s anding o Tax Obliga ions
The s udy e ealed ha nea ly all c oss-bo de ade s in
Lilongwe Ci y we e awa e o hei legal obliga ion o pay axes.
O he 62 esponden s, 61 (98.4%) acknowledged awa eness,
while only one (1.6%) exp essed igno ance. These indings
sugges ha igno ance is no a signi ican impedimen o
compliance. Howe e , awa eness did no necessa ily ansla e
in o compliance, indica ing a knowledge–p ac ice gap. T ade s
o en made in o med choices o e ade axes, d i en by ac o s
such as nega i e pe cep ions o axa ion, pe cei ed
disc imina o y a es, co up ion among en o cemen o icials,
and weak moni o ing sys ems.
Sel -assessed unde s anding o ax ules a ied. While 40.3%
a ed hei knowledge as good and 29.0% as ai , 20% admi ed
poo o e y poo unde s anding. Only 9.7% epo ed excellen
knowledge. This une en dis ibu ion o knowledge highligh s a
dual e ec : poo ly in o med ade s may e ade axes
inad e en ly, while well-in o med ade s may exploi hei
knowledge s a egically o minimize hei liabili ies, consis en
wi h indings om beha io al ax compliance li e a u e.
T aining and Sensi iza ion on Tax Compliance
Less han hal o he esponden s (45.2%) epo ed ha ing
pa icipa ed in aining o sensi iza ion wo kshops, while 54.8%
had no . Limi ed access o s uc u ed aining pe pe ua es
misin o ma ion and eliance on in o mal sou ces such as pee
ne wo ks, which may encou age non-compliance. T ade s
exposed o aining we e mo e knowledgeable bu no
necessa ily mo e complian , sugges ing ha sensi iza ion alone
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does no gua an ee adhe ence; a he , a i udes owa ds he ax
sys em media e i s impac .
Ins i u ional and Regula o y Fac o s
T ade s exp essed mixed pe cep ions o en o cemen
e ec i eness. A combined 62.9% pe cei ed en o cemen
mechanisms as e ec i e o e y e ec i e, while 37.1%
ega ded hem as ine ec i e. These di e gen iews imply ha
while en o cemen os e s compliance o some, skep icism
ega ding consis ency and ai ness uels oppo uni ies o
a oidance.
Co up ion was iden i ied as a signi ican ins i u ional ba ie .
Mo e han hal o esponden s (53.2%) epo ed ha co up ion
among ax o icials s ongly in luenced compliance decisions.
This aligns wi h Ins i u ional Theo y, which posi s ha
legi imacy and us in go e nance a e c i ical o os e ing
olun a y compliance. Fu he mo e, 69.4% o ade s ag eed
ha ai en o cemen posi i ely in luences compliance,
unde sco ing he ole o equi y and anspa ency in shaping
beha io al ou comes.
Tax Sys em Fea u es and Compliance Beha io
High ax a es eme ged as he mos in luen ial d i e o e asion.
A majo i y (58.1%) admi ed o equen ax e asion mo i a ed
by excessi e a es, wi h an addi ional 22.6% e ading
occasionally. Simila ly, pe cep ions o adminis a i e bu den
we e widesp ead: 59.7% conside ed ax p ocedu es complex o
e y complex. Bo h high a es and p ocedu al complexi y we e
linked o delibe a e and unin en ional non-compliance,
e lec ing he explana o y powe o he Economic De e ence
Model.
Measu es o Imp o e Tax Compliance
Responden s emphasized economic elie and educa ion as
p ima y solu ions. Lowe ing ax a es (38.7%) and expanding
awa eness/ aining p og ams (33.9%) we e iden i ied as key
measu es, while smalle sha es p oposed simpli ied p ocedu es
(9.7%), educed co up ion (9.7%), and suppo o small
ade s (8.1%). Incen i es also p o ed in luen ial: 74.2% o
esponden s s a ed hey would comply i he go e nmen
in oduced compliance- ela ed incen i es. These indings
sugges ha bo h s uc u al e o ms (simpli ica ion, ai ness,
an i-co up ion) and beha io al in e en ions (educa ion,
aining, incen i es) a e necessa y o imp o e compliance.
C oss-Tabula ion Insigh s
C oss- abula ion analyses u he demons a ed he nuanced
ela ionship be ween socio-economic cha ac e is ics and
compliance beha io . Low-income ade s (ea ning below
MK2,000,000 mon hly) we e mo e likely o p io i ize educed
ax a es and aining, e lec ing a o dabili y and access
cons ain s. Con e sely, weal hie ade s emphasized
go e nance conce ns such as anspa ency and co up ion
educ ion. Income also co ela ed nega i ely wi h ax e asion
equency: he poo es ade s epo ed he highes a es o
e asion due o he pe cei ed unsus ainable bu den o axa ion.
Educa ion le el posi i ely in luenced knowledge o ax ules,
hough de iciencies pe sis ed e en among e ia y-educa ed
esponden s, sugges ing ha o mal educa ion alone is
insu icien wi hou a ge ed ax aining. Addi ionally,
mode a ely expe ienced ade s (1–3 yea s) we e mo e likely o
pa icipa e in sensi iza ion p og ams han new en an s o long-
es ablished ade s, indica ing ha p og am ou each may no
adequa ely cap u e he mos ulne able g oups.
5. FINDINGS/OBSERVATIONS
Key Insigh s
1. High awa eness bu low compliance – Awa eness o ax
obliga ions (98.4%) does no gua an ee compliance,
highligh ing a knowledge–p ac ice gap.
2. Une en dep h o knowledge – While 40.3% had good
knowledge, 20% a ed hei s as poo o e y poo , enabling
bo h delibe a e and unin en ional non-compliance.
3. T aining is limi ed and insu icien – Only 45.2% o
ade s had ecei ed aining, and e en ained ade s
some imes e aded axes.
4. Ins i u ional weakness and co up ion – 37.1% iewed
en o cemen as weak, and 53.2% ci ed co up ion as a
majo ba ie , unde mining us in ax au ho i ies.
5. Pe cep ions o excessi e axa ion – 74.1% pe cei ed ax
a es as high o e y high; 58.1% admi ed o equen
e asion due o a o dabili y conce ns.
6. P ocedu al complexi y educes compliance – 59.7%
ound p ocedu es complex, inc easing eliance on in o mal
sys ems.
7. Policy p io i ies o ade s – Lowe ing ax a es (38.7%)
and expanding awa eness (33.9%) we e seen as he mos
e ec i e s a egies, wi h incen i es iewed as addi ional
mo i a o s.
Table 1: S a is ical Analysis o he Findings
Va iable
Response (%)
In e p e a ion
Awa eness o ax obliga ions
98.4% awa e
High gene al awa eness, low igno ance
Unde s anding o ax ules
Good: 40.3%, Fai : 29%, Poo /Ve y Poo : 20%
Knowledge gaps a ec he compliance
ype
T aining pa icipa ion
45.2% ained
Limi ed o mal sensi iza ion
Pe cep ion o en o cemen e ec i eness
E ec i e/Ve y E ec i e: 62.9%
Mixed pe cep ions in luence compliance
Pe cep ion o co up ion impac
Majo /Pa ial: 62.9%
Co up ion unde mines legi imacy
Tax a es a e pe cei ed as high
74.10%
High a es d i e e asion
Tax p ocedu e complexi y
Complex/Ve y Complex: 59.7%
P ocedu al bu den a ec s compliance
Sugges ed measu es o compliance
Lowe ax a es 38.7%, Awa eness/ aining 33.9%
Economic elie and educa ion a e key
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6. CONCLUSION AND RECOMMENDATIONS
Summa y o he Main Poin s
The s udy concluded ha ax a oidance and e asion among
c oss-bo de ade s in Lilongwe Ci y a e in luenced no by a
lack o awa eness bu by sys emic and ins i u ional challenges.
High ax a es, complex p ocedu es, and co up ion emain he
key d i e s o non-compliance, pa icula ly among small-scale
and low-income ade s. Howe e , he indings also show ha
anspa ency, ai ness, and educa ion can signi ican ly enhance
compliance i p ope ly implemen ed. By e o ming ax policies,
simpli ying p ocedu es, s eng hening accoun abili y, and
in oducing suppo i e measu es, go e nmen ins i u ions can
expand he ax base while ensu ing equi y and sus ainabili y.
Ul ima ely, add essing he iden i ied ba ie s is essen ial o
building a ai e and mo e e ec i e ax sys em ha p omo es
bo h economic g ow h and go e nmen e enue.
Sugges ions Fo Fu u e Resea ch o Ac ions
The indings o his s udy p o ide he basis o implemen ing
measu es a ge ed o imp o e ax compliance be ween in o mal
ade s om ac oss he bo de in Lilongwe ci y. The
ecommenda ions a e ocused on o e coming sys emic
obs acles such as high ax a es, p ocedu al ba ie s, co up
p ac ices, and lack o en o cemen , while olun a y compliance
(Felds ad & Hegs ad, 2012) also o e s suppo o c ea ing an
a mosphe e. By ocusing on changes in ins i u ional d i e s o
bo h economic ac o s and beha io , hese measu es should
help o de elop con idence in ax adminis a ion, imp o e
compliance wi h ax obliga ions, widen he ax base, and
de elop a ai and mo e du able ax sys em (Ki chle , 2007)
The p oposals a e based on e idence o an in e connec ed
ela ionship be ween socio-economic si ua ions, business
expe iences, ins i u ional app oaches, and beha io al eac ions,
which show ax e asion and in o mal c oss-bo de ade.
(Anu adha, Wilson, & Ch is ophe , 2014). The e is e idence o
he balance be ween en o cemen , educa ion, anspa ency, and
access o economic and ins i u ional obs acles o compliance
wi h p oposals. Thus, bo h o hem ques ion p ac ical measu es
on heo y and heo e ical pa adigms such as p e en i e heo y,
esponsible egula ion heo y, and social con ac heo y. Tax
compliance emphasizes all hese ou lines on es ic ions,
esponsible egula ion, and alidi y pa icipa ion (B a hwai e,
2003; Ki chle , 2007).
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Abou he Co esponding Au ho
Limbani Lungu is a pos g adua e schola pu suing
a Mas e o Comme ce in Accoun s and Finance a
DMI–S . Eugene Uni e si y, Zambia. His academic
in e es s include inancial managemen , axa ion,
and business esea ch. He aims o con ibu e o
e ec i e inancial p ac ices and sus ainable
economic de elopmen h ough ad anced s udy
and he applica ion o knowledge.
